Read The Great Depression Online
Authors: Benjamin Roth,James Ledbetter,Daniel B. Roth
The Great Depression (14 page)
Congress expects to adjourn this week and the B.E.F. (Bonus Expeditionary Force) in Washington is making a final effort to get the bonus. Soldiers formed a protesting circle completely around the Capitol building and remained there all night.
The City Trust & Savings Bank re-opens for business today but allows only $50 withdrawals. Very few people appear to make withdrawals. A great deal of skepticism is expressed on the street about its ultimate success. This is the 3rd bank in Youngstown to re-open with the assistance of Hoover’s Reconstruction Finance Corporation.
For the first time in American history the tide of immigration is away from the U.S.
I have recently talked to people from Florida and also from California. In both cases they insist the conditions are worse there than here.
Florida in particular is absolutely flat since the land boom of 1925. Literally whole communities can be bought up with little cash.
It is almost funny to talk to professional men on the street today. They are all flat broke and in most cases are in arrears for office rent and household necessities.
Last week dad went down to the West Rayen Avenue-St. Clair district to look over our property. He says most of the buildings have been torn down by the owners rather than to pay the taxes and small gardens have taken the place of former store buildings. He says the district is reverting to farm land and is beginning to look as it did 40 years ago when we first settled there.
There seems to have developed a new feeling of optimism among the people lately and it is hard to explain because there are very few tangible signs of improvement. I have a feeling that the Republican administration will be able to produce at least a temporary upswing during September and October preceding election but I am not so sure it will be permanent.
In the meanwhile a new banking crisis has appeared in Chicago and elsewhere. The big Continental-Illinois Bank of Chicago was saved by an eighty million reconstruction gov’t loan. I do not believe our re-opened banks here can be affected because no further withdrawals can be made by depositors under the terms of their new pass books.
The Keith-Albee Theater is the latest theater to close “temporarily” and it is said that the Warner Theater will also close at the end of this week. If this happens Youngstown will be left with only one first-class picture show—the “Paramount.”
A considerable traffic has grown up in Youngstown in purchase and sale at a discount of Pass-Books on the Dollar Bank, City Trust and Home Savings Banks. Prices vary from 60% to 70% cash. All of these banks are now open but are not paying out funds.
Steel operations are at 17% capacity. The newspapers this evening give a big head-line to the fact that U.S. Steel today decides to pay its preferred dividend. Almost everybody thought it would be omitted. This is done in spite of the fact that U.S. Steel only earned 1/2 its pffd div. in 1931 and lost 13 million in first quarter of 1932.
EDITOR’S NOTEThe Bonus March standoff became tense and confrontational after the Senate rejected an early release of the veterans’ bonuses. The veterans had established camps throughout Washington, D.C., including a settlement right near the White House on Pennsylvania Avenue. Negotiations between protesters and city police for an orderly withdrawal broke down. While police removed the Pennsylvania Avenue veterans, fighting and rock throwing broke out, and police shot and killed one veteran and wounded three others. This in turn triggered the involvement of the federal army, who took to the streets of Washington with cavalry forces and tanks against World War I veterans with whom some of them had served. The army forces, under the command of Army Chief of Staff Douglas MacArthur, pushed the marchers out of the city using bayonets and tear gas, then proceeded over the Potomac to Anacostia and burned down the shantytown where some 15,000 veterans had camped. The result was a public relations debacle for Hoover and MacArthur. Intriguingly, leading the cavalry was Maj. George Patton and acting as MacArthur’s liaison to the police was Maj. Dwight D. Eisenhower; all three men would become household names during World War II.
The stock-market has been making up for past two weeks and newspaper headlines hail it as a sign of permanent betterment. I wonder how much of this sentiment between now and election day will be manufactured by the Republican Party.
War veterans riot in Washington because bonus is refused and one veteran is killed by police in an attempt to picket the White House.
Beggars going from house to house are getting more numerous and more bold. I dread what the coming winter will bring forth.
It is almost unbelievable the ways prices have fallen in past two years. Haircuts are now 25¢; shoe shine 5¢; a fairly good suit for men can be purchased for $25 (Strauss-Hirshberg has a window display at $9.90). The only lunch counters doing any business are those selling sandwiches for 10¢; pie for a nickel and a bowl of soup for a nickel.
Business this summer has been at a complete standstill—legal fees almost non-existent. Conversation between professional men is always the same—about the depression. Many have sent their stenographers away—others haven’t paid office rent for several months and still others have given up their office. It is one of the most difficult summers I’ve witnessed.
Both Youngstown Sheet & Tube Co. and Republic show tremendous losses for the second quarter. Their average loss is over a million dollars per month for past year.
The U.S. Engineers, after months of survey, just report unfavorably as to the canal from Youngstown to Lake Erie and Ohio River. They say there is insufficient natural water supply, too great an encroachment on the river bed by railroads and mills and too great an expense involved to raise present bridges. This is a sad blow to Youngstown because the large steel mills say they cannot exist here against competition with cheap water transportation. This becomes still harder since ocean travel may be soon opened to lake and river cities by the agreement recently made between U.S. and Canada to push completion of the St. Lawrence Canal to the Great Lakes. A good many thoughtful citizens are wondering if the next 25 years in Youngstown will show progress.
The stock market continues upward for two weeks now in the face of unfavorable semi-annual reports and predictions are again made freely that we have turned the corner.
6/6/33It now seems that this prediction was true and that the summer of 1932 marked the bottom of the depression.
Once again the U.S. Government thru the Reconstruction Finance Corporation comes to the help of Youngstown. This time it lends $336,000 to Mahoning County for relief work. It may save considerable suffering this coming winter.
In the last 30 days the stock market has given one of the most strenuous rallies in its history. Even the
N.Y. Times
yesterday devoted considerable front page space to it. There is no tangible explanation for this by way of industrial revival and yet there is plenty of optimism and feeling that this fall will see a turn for the period. In this 30 day period most of the popular common stocks have doubled and tripled in value. The entire list shows a 70% increase in value. A few samples are: U.S. Steel from 22 to 42; Western Union from 13 to 34; G.E. 8 to 19; IT&T 3 to 8; Anaconda 5 to 14; Sheet & Tube 4 to 12; Republic 2 to 5 etc. We will probably see a number of these movements before permanent betterment sets in.
N.Y. Times
yesterday devoted considerable front page space to it. There is no tangible explanation for this by way of industrial revival and yet there is plenty of optimism and feeling that this fall will see a turn for the period. In this 30 day period most of the popular common stocks have doubled and tripled in value. The entire list shows a 70% increase in value. A few samples are: U.S. Steel from 22 to 42; Western Union from 13 to 34; G.E. 8 to 19; IT&T 3 to 8; Anaconda 5 to 14; Sheet & Tube 4 to 12; Republic 2 to 5 etc. We will probably see a number of these movements before permanent betterment sets in.
It is interesting to note that the real estate situation is worse now than ever. The banks are loaded down with foreclosed properties and won’t fully dispose of them for the amount of their mortgage. Tenants don’t pay rent, people don’t pay taxes or their mortgages, the property goes without much needed repairs. It is a vicious circle. As far as Youngstown is concerned real estate has been on the down grade and hard to dispose of ever since the war boom collapsed in 1921. Since bank books can now be bought at large discounts some people are buying them up and then trading them in on foreclosed properties held by the bank. As usual it takes some cash to benefit by the situation.
President Hoover delivers a splendid political speech over the radio last night. He points out that this depression has consisted of two phases. The first phase was an ordinary depression and we in U.S. were recovering from it 18 months ago. But then 18 months ago European countries began to collapse, went off gold standard, withdrew gold from U.S. and had revolutions. 75% of European countries went thru this—they had no (real) money with which to buy U.S. mdse. and as a result we had in U.S. bank closings and almost complete paralysis.
It was to fight this that Hoover 18 months ago used government funds to loan to banks and private business and for public works. This is still going on and will continue as long as possible. It is remarkable that so far in U.S. we have had no labor strikes, no bloodshed or other violent exhibitions.
The movement back to the farm has grown stronger during the past two years until today it is almost an exodus from the city to the farm. Farmers and children of farmers who were attracted to the city by high industrial wages during the past 10 years are now moving back. This is made easier due to the large number of foreclosed farms now on the market at low prices. Many good farms near Youngstown improved with fairly good buildings can be bought at $15 to $20 per acre—which is less than the cost of the improvements. In most cases the people moving to the farm feel they will at least be sure of plenty of food for their families.
The stock market continues to move upward. This has continued for over 30 days except for a short pause of a few days last week. A great many stocks have tripled and quadrupled in value in that time. The speculative interest of the public seems as strong as ever in spite of their experience of 1929. Most of them seem determined to recover part of their losses. Both commodity prices and the bond market are also moving up. In the meanwhile there is no visible sign of improvement in businesses or industry and on the contrary it seems to be getting worse. The situation is hard to explain. Most observers believe that between now and election day the Republican Party will try to boost the market, raise commodities, urge corporations to maintain dividends and in other ways create sentiment to the effect that the depression is over. I won’t believe this until industry itself shows signs of pickup.
The stock market has quieted down a little but the trend of both stocks and bonds is still upward. This market spurt differs from the others only in that bonds have advanced as rapidly as the stocks. It seems to me that a good many stocks are too high now in view of prevailing conditions. For instance General Motors sells at 18 and General Electric at 20 while at present rate of earnings neither one is worth more than 10. In the meanwhile business is at a complete standstill and my earnings this month perhaps the worst of the depression. People are absolutely flat and except for the stock market they would be pretty hopeless. Also nobody seems to be able to figure out just why the market should go up except perhaps that it is being maneuvered for political purposes.
A “farmers strike” is in progress in Iowa and other Western states. The farmers claim they don’t get enough for produce to pay for the labor. In this strike they are dumping and destroying milk and food products and blockading all roads leading into the city so that no farmer can sell his products until the price is raised.
The national labor unions yesterday go on record as being opposed to all wage cuts. Everything else has been reduced and I don’t see how there can be permanent recovery until wages are reduced accordingly. On the Federal Post Office job in Youngstown, a strike was declared last month and the men walked out because the contractor refused to pay a $10 rate. In view of the present low cost of living this seems ridiculous to me. It still bears the stamp of inflation.
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